Scissors Crisis

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The Scissors Crisis was an incident in early 1923 Soviet history during the New Economic Policy (NEP), when there was a widening gap ("price scissors") between industrial and agricultural prices. The term is now used to describe this economic circumstance in many periods of history.

Like the blades of a pair of open scissors, the prices of industrial and agricultural goods diverged, reaching a peak in October 1923 where industrial prices were 276 percent of their 1913 levels, while agricultural prices were only 89 percent.^[1] The name was coined by Leon Trotsky after the scissors-shaped price/time graph.^[2] This meant that peasants' incomes fell, and it became difficult for them to buy manufactured goods. As a result, peasants began to stop selling their produce and revert to subsistence farming, leading to fears of a famine.

After the 1927 crisis, soviet economist Lev Gatovsky performed an analysis and actively participated in the planning for the state intervention that followed.^[3]